Banks are already moving to pass on the Reserve Bank's latest interest rate hike, with one Illawarra mortgage expert stating now is the time for home owners to have a discussion with their lender about refinancing.
On Tuesday, the Reserve Bank raised the cash rate by a larger than expected 50 basis points, taking the overall cash rate to 0.85 per cent.
Westpac was the first major bank to announce they'd be passing on the full rate hike to customers, with others expected to follow suit within the week.
Read more: RBA's latest rate rises could cost Illawarra home owners hundreds more a month
It's the second time the RBA has raised rates in as many months, following the board's May decisionto begin hiking rates from their record low of 0.1 per cent, where they had sat since November 2020.
Matthew Clark, principal at RAMS Home Loans Illawarra has already been getting calls from concerned clients following Tuesday's RBA decision, with many asking what options they had.
"People were doing that since the first rate rise as well," he said.
Asking your current lender for a better deal or shopping around with competitors were two of the key options concerned borrowers could consider, Mr Clark said.
"I think that's good advice; if you haven't spoken to your lender for 12 months, you should definitely give them a call.
"Products change over time, and there might be something different or better that can save you some money. .. If you've been on a variable product for two or three years and haven't spoken to your lender, I would suspect they'd have something they can offer you that's better. And it might be enough to negate the rate rise."
Mr Clark said as general advice, home owners should be looking at their loan every year or two anyway, "but if you haven't looked at it for some time and not really sure if you're still on the best deal, it's worth making the call".
"If your existing lender can't give you something better, call some competitors and see what's out there," he said.
"The obvious advantage is you can save some interest.
"And there might be some other things at the same time, like some debt consolidations you can do to make things easier, but that's depending on your individual situation."
Mr Clark said the extent of the rate rise was a "little surprising, but not overly so".
He said it was widely expected that a 0.4 per cent increase would be announced to bring the rate back to a standard, "as they usually go up by 25 basis point increments, so it would bring it back to that normal level".
Read more: Illawarra property prices go backwards for first time since 2019: CoreLogic
It's not just current mortgage holders set to suffer under increased rates, with the changes also likely to reduce the borrowing power of those currently in the market for a home.
Monique Field of the Shell Cove-based Monique Field Property said the rate rise would affect some prospective buyers' borrowing capacity, such as upsizers who "might lose up to $100,000 on their borrowing capacity as interest rates continue to go up".
"It's gone up 0.75 per cent in a month, so their serviceability... It means they're not in that buying group, that price range or budget. They're in a different price range.
However, Mrs Field said while some investors may look to play the waiting game, quality homes would still sell to owner-occupiers.
"That's because this isn't a short-term thing, they're not trying to flip it and make a profit as a renovator," she said. "It's where they're going to live for seven, ten years at least."
She said it was also important to note that "it was all relative" if you were buying and selling in the same market.
"Some people say to me, 'I should have sold last year'," she said. "And I say, 'yeah, you would have got more money. But where you were going next you would have paid more money too'."
Tim Lawless, CoreLogic research director predicted that there would be further rises in coming months.
"With underlying inflation moving sharply higher to be up 3.5 per cent over the year, the RBA's heavy lifting on the cash rate still has some way to go, with interest rates likely to consistently rise through the second half of the year and into 2023," he said.
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